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Mr Justice Mackay, who has spent 30 years involved in similar cases, said 750,000 passengers' lives had been put at risk due to the broken rail that eventually caused the London to Leeds express to come off the track at 115mph.

The derailment also left 102 injured. It was an accident waiting to happen because of a cavalier approach to safety, according to the prosecution.

A faulty rail at the site was identified 21 months before the crash but left unrepaired, although a replacement rail had been delivered and left alongside it for six months.

Audrey Arthur, whose son Stephen was one of the victims, said yesterday: "I don't think justice was done.

"I can take no satisfaction from today. Money is nothing. They were getting I don't know how much in bonuses."

Mr Arthur, 46, from Pease Pottage, West Sussex, died along with Robert Alcorn, 37, from Auckland, New Zealand, Leslie Gray, 43, from Tuxford, Nottingham, and Peter Monkhouse, 50, from Leeds.

Until yesterday, the largest fine imposed in the English courts was £2 million, on Thames Trains after the 1999 Paddington rail crash. The company had pleaded guilty to two health and safety charges.

Mr Justice Mackay said he had guarded against over-reaction in sentencing, but Balfour Beatty was "one of the worst examples of sustained industrial negligence" he had come across.

"These were breaches of a general duty to the public," he said. "Both companies fell below appropriate standards. Balfour Beatty's failure lay at the top of the scale."

The company, which has since moved out of rail maintenance work and was cleared of manslaughter charges on the directions of the judge, pleaded guilty to health and safety breaches on the 93rd day of a seven-month trial. Network Rail was convicted by a jury that also acquitted five engineers working for both companies.

The men had earlier been cleared of manslaughter, again on the directions of the judge.

The judge laid bare the poor management of a 31-mile stretch of line under the control of Balfour Beatty's route section management office at Hitchin, Herts.

The Hitchin team was responsible for maintenance and inspection of the track. Staff shortages, the judge said, meant that the company could not provide look-outs, necessary for the line to be inspected properly.

Peter Lewis, a route section manager, who was supposed to walk the line every eight weeks, did not do so in five and a half months. An inspection report, dated mid-September, was dismissed as a forgery by the judge.

Ultrasonic inspections were carried out. "They gave a red alert of increasing urgency and nothing was done."

Network Rail's fine did not take into account Railtrack's failure to replace the defective track. But, the judge added: "I agree that this was incompetence of the worst order."

The judge noted that what he described as one of the indefensible features of privatisation by the last government - the separation of track ownership and maintenance - had been ended.

"Perhaps that is one good thing resulting from this disastrous affair," he said.

Safety campaigners welcomed the severity of the fines, which they said sent a message out to the industry.

"We have said there have to be bigger, swingeing fines for companies and it's good to see that there have been in this case," said Carol Bell, who was injured in the 1997 Southall rail crash and is vice-chairman of the Safe Trains Action Group.

But Bob Crow, the general secretary of the RMT transport union, dismissed the penalties as paltry.

Balfour Beatty announced on Thursday that it had been awarded a £110 million contract by Network Rail for work on the electrification of the West Coast mainline.

Yesterday the company said it would be considering the judgment in detail but insisted that it had worked within the industry standards on line patrolling and inspection in force at the time.

A spokesman added: "It is however clear that the accident arose as a result of a systemic failure of the industry as a whole."

Ian McAllister, Network Rail's chairman, said: "Network Rail is a very different company to Railtrack. In the three years that it has been in charge of the nation's railway infrastructure, it has made sweeping changes to its priorities, to the company structure, and to its people and processes."